New York State Department of Public Service Authorizes Rochester Gas and Electric Corporation to Issue up to $650 Million in New Securities

Strategic Insights -

The New York State Department of Public Service has granted Rochester Gas and Electric Corporation (RG&E) permission to issue up to $650 million in new securities through March 31, 2023, to refinance debt and fund capital expenditures. This authorization is subject to certain conditions outlined in the order. RG&E plans to use the proceeds from the sale of securities solely for traditional utility purposes, such as refinancing $125 million of debt maturing in July 2021 and funding approximately $1.13 billion of capital expenditures. The company also seeks the authority to utilize derivative instruments to manage interest rate risks and other financial exposures.

Key Takeaways:

  • The Commission authorized RG&E to issue up to $650 million of new securities through March 31, 2023, subject to certain conditions.
  • RG&E intends to use the proceeds from the sale of securities solely for traditional utility purposes, including refinancing debt and funding capital expenditures.
  • The company has reduced its forecasted construction expenditures from $1.20 billion to $1.13 billion.
  • RG&E has outstanding authority of $59.85 million from a previous finance order, which it requests be superseded by the new authorization.
  • The company will utilize derivative instruments, such as interest rate swaps, to manage financial exposures.
  • RG&E serves approximately 381,000 electric and 316,000 gas customers in nine counties in western New York State.
  • The company's unsecured debt is currently rated "A3" by Moody's Investors Service, Inc. (Moody's) with a negative outlook and "A-" by S&P Global Ratings (S&P) with a stable outlook.
  • RG&E's credit ratings reflect strong ring-fencing provisions that insulate the regulated utility from higher-risk upstream corporate operations at Avangrid.